USDA Loans

Sometimes good credit and a steady income are
not enough to qualify for a home loan at a commercial
lending institution, such as a bank, savings
and loan or mortgage company.

More rural families and individuals may be eligible
to become homeowners with the help of a
USDA guaranteed home loan. When the federal
government agrees to guarantee a loan, lending
institutions can help buyers while incurring less
risk. Through USDA’s Guaranteed Rural Housing
Loan Program, low- and moderate-income people
can qualify for mortgages even without a down

payment.

Guaranteed Rural Housing Loans

To be eligible, applicants must:
Have an adequate and dependable income;

Be a U.S. Citizen, qualified alien, or be legally
admitted to the United States for permanent
residence;

Have an adjusted annual household income
that does not exceed the moderate income
limit established for the area. A family’s
income includes the total gross income of the
applicant, co-applicant and any other adults in
the household. Applicants may be eligible to
make certain adjustments to gross income—
such as annual child care expenses and $480
for each minor child—in order to qualify.

USDA Rural Development field offices can provide
information on the moderate income limits
for the areas that fall within their jurisdiction,
and can provide further guidance on calculating
household income.

Have a credit history that indicates a reasonable
willingness to meet obligations as they
become due;

Have repayment ability based on the following
ratios: Principle, Interest, Taxes, and Insurance
(PITI) divided by gross monthly income must
be equal to or less than 29 percent. Total debt
divided by gross monthly income must be
equal to, or less than, 41 percent.